As the Metropolitan Council prepares to work with local cities on their comprehensive plans, Council staff and leaders are working with local researchers to better understand industry clusters and how local planning decisions and regional infrastructure investments can encourage private investment.
WHY DO INDUSTRY CLUSTERS MATTER?
- They are the building blocks of the modern economy and a key lens to understand the profile of a regional economy.
- They drive regional economic performance, from prosperity to job growth and innovation.
- They are a powerful channel and organizing principle for effective policies to shape economic development.
- They provide business opportunities for investments, exports, site selection, and supply chain assessment.
“Industry cluster analysis” is a tool that describes the relationships between businesses and other supportive institutions that are based within a region. Metropolitan areas, and the individual cities within them, can use this tool to identify and take advantage of their unique strengths and make planning decisions that will attract and retain businesses that provide jobs and local investment.
The Council’s Committee of the Whole recently invited Lee Munnich, Director of the State and Local Policy Program at the University of Minnesota, along with U of M professor Yingling Fan and economic development consultant Janna King, to present and discuss their research on industry clustering.
MSP has several strong industry clusters
"If your neighbor works in one of the key industries in the Twin Cities, they can probably tell you about the other businesses that they work with across the region," said Munnich, in describing how individual companies work together as part of an industry cluster.
All regions have clusters in which they specialize. Munnich and his associates have found that, compared to the rest of the country, the Minneapolis/Saint Paul region has particularly high employment concentrations—compared with the U.S. as a whole—in medical device manufacturing, analytical instruments, lighting and electrical equipment, financial services, publishing and printing, and chemical products.
Once a region understands the industries in which it has a competitive edge, local and regional leaders can identify how best to offer sites and amenities that will encourage business leaders in these industries to grow their presence.
Housing, workforce training are important to economic competitiveness
The ability of the community to attract and retain a young workforce and the proximity of housing that meets the needs of its workforce are among the key considerations for businesses when they are looking to make local investments, King said.
"When it comes to housing, business leaders are looking for affordable housing as well as executive housing," said King, of Economic Development Services, Inc. "They want to know that all types of housing are readily available."
Workforce availability is about more than attracting new talent to a region. Munnich, King, and Fan all indicated to Council Members that the Twin Cities must focus on supporting efforts to ensure that working age adults are equipped with the skills that leading employers are seeking in their prospective employees. The regional workforce must also have efficient and reliable access to the areas where employers want to locate, they said.
Competitive industry clusters require access to the workforce
According to Fan, transit infrastructure and thoughtful land-use decisions play a critical role in facilitating connections between employers and workers.
“Competitive industry clusters require connections and accessibility,” said Fan. “Workers need to be able to connect with job opportunities and employers need to be able to connect with their labor force.”
Fan’s research shows that our region’s current transit system provides high access for jobs in some clusters and very little access for others. For example, the transit system provides connections to 47% of finance jobs across the region and only 7% of medical manufacturing jobs.
Fan noted that the Blue Line and Green Line extensions will play a particularly important role in connecting areas with high unemployment to areas with high concentrations of employers with job vacancies. They will result in a 7% increase in transit-accessible jobs in the region. In order to achieve this, it will be important for local communities to increase housing and employment density along planned transit corridors, she said.
For comparison, Fan and her research team assembled an alternative scenario where growth is focused away from transit. In such a case, Fan forecasts that transit access to jobs would actually decrease by 1.5% across the region.
Partnerships needed to build competitive economy
Munnich stressed the importance that regional partnerships play in creating a more competitive regional economy.
“It used to be that every community was out for itself,” he said. “Increasingly we’ve seen mayors talk about working together to take more of a regional approach to economic development. Transit plays an important role in this conversation.”
The Metropolitan Council is taking steps to work with local communities to understand how they can maximize their economic growth as part of a dynamic regional economy. King is working alongside community development staff at the Council to compile information that will provide insight to local leaders on the niche role of their communities. Local planners will able to use this information to making zoning, transportation, and other infrastructure decisions that will capitalize on their community’s strengths and contribute to greater levels of prosperity throughout our region. Much of this information will be made available for voluntary use in the online Local Planning Handbook that will help guide communities as they update their local comprehensive plans during the next three years.